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An Introduction to the FMEA Model For Risk Management (Failure-Mode-Effect-Analysis)

by @reagan No Comments
FMEA - Risk Management

The FMEA Model is a risk management tool used to identify and manage risks within projects and across entire departments and organisations. It can be a process FMEA (where the risks are process failures) or a design FMEA (where the risks are product or system-related failures).

FMEA = Failure Mode Effect Analysis

Within a Lean Six Sigma Training perspective, the FMEA can be used in the:

> Define Phase – to understand the overall project risks
> Analyse Phase – to deep dive the current key risks in the existing proces
> Improve Phase – to evaluate the risks associated with different potential solutions
> Control Phase – to ensure the ongoing management of the project and ensure all risks of the new process are carefully managed

“Risk comes from not knowing what you are doing”. Warren Buffet

THE FMEA MODEL – RISK MANAGEMENT

 

THREE KEY MEASURES

To assess the risk correctly, a FEMA model utilises the product of three measures:

> Frequency of Occurrence
> Severity of Occurrence
> Chance of Detection

 

It is the product of these three ratings which define what is known as a Risk Priority Number (PRN). The PRN number is a numerical assessment of the risk and therefore it highlights key risks and helps to priorities any activities to improve the overall risks.

For example, let’s say that you are printing membership cards and you know that the key issue is when the card is printed incorrectly. Let’s have a look at a quick example:

Mode of FailureCauseEffectFrequencySeverityDetectionPRN
Card Printed IncorrectlyIncorrect information providedCard must be reissued385120
Information incorrectly entered in databaseCard must be reissued585200

The RPN (risk priority number) is the product of the frequency, severity and detection values. In other words:

RPN = Frequency x Severity x Detection

In this example, the frequency is representing how likely is it that the error will take place. You can see that the fact that the information is incorrectly entered in the database happens more frequency than the incorrect information is provided at the beginning. The severity refers to how significant the impact is. In this case, both examples scored an 8 and the cards will need to be reissued. The final section measures how likely is that this mistake will be detected internally. The number 5 shows that we have a 50/50 chance of detecting this internally. For the other 50% of the times, it will be the customer who notifies us.

In this example, the PRN value clearly indicates that “information incorrectly entered into the database” should be given priority for improvements.

At this stage, keep in mind that for the FMEA to be effective the categories must have reliable measures or a clear matrix to score the Frequency, Severity and Detection levels the same. Generally speaking, most companies:

> Develop their own measures for the three categories (frequency, severity and section) or
> They use standard values that have been developed within their industry.

TAKING ACTIONS

Once you have reviewed the potential reasons why a process, product or service my fail and the impact to the business, you are then in a position to begin to reduce and improve the overall risk management.

So the first step is to take the highest PRN score and begin as a team to identify potential ways to reduce the risk if the risk is deemed too high. You can:

> Highlight actions to reduce the risk
> Identify the person who will lead the activity and when they will deliver it
> Record the actions that are taken
> And then, you can update the Severity, Occurrence and Detection scores to calculate a new RPN.

This process can continue until you have levels of risk that you are happy with.

FMEA Model - Risk Management

LEARNING MORE

You can gain access to the template and learn more about the benefits of Lean training for business professionals. Or if you need support or advice on a particular issue, please reach out directly or book a  consultancy call here. Learn More

SUMMARY

The FMEA Model is a living document for risk management which should accompany any project, product or service design, changes or just as part of the overall process documentation.

Not that all risks are bad but it’s understanding of what those risks are and then deciding if the business is happy to live with them.

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